It takes an immense amount of energy to run our world’s $60 trillion economy. Some 40 percent of that energy is provided by oil, which, despite all the controversy surrounding it, is a very convenient and effective energy source.
Yet, because of $526.09, the oil industry might not have gotten going when and how it did. For $526.09 was exactly how much a group of promoters owed to a Yale professor named Benjamin Silliman Jr. in the middle of the 19th century – 1855, to be precise. Silliman had done an analysis of a substance called “rock oil,” found seeping to the surface in a remote backwoods area of northwest Pennsylvania. And he had the answer to a very important question: could this rock oil be refined into a product called kerosene and burned in lanterns as a source of lighting. This was still a few decades before Thomas Edison launched the electric power industry. At the time Silliman prepared his report, the highest quality lighting at the time was from whale oil – which was increasingly in short supply.
On whether the promoters could scrounge the money together to pay Silliman hinged, as it turned out, whether the oil industry would get off the ground. That is why I begin The Prize with that very precise figure of $526.09. They did find the money, Silliman did get paid; and he turned over the report that demonstrated that rock oil could be refined into a very good replacement for whale oil. With that, the promoters hired a retired railroad conductor named Edwin Drake.. Drake and his team, in turn, drilled the first oil well and, on August 28, 1859 – 150 years ago this week – they hit oil.
Although not well known, for its first 40 years, the oil business was primarily an illumination business. John D. Rockefeller made his fortune selling illumination. Then electricity came along, and the prospects for the oil industry decidedly dimmed. But then a new innovation – the automobile – drove onto the scene, and that created the oil age that we all know. It is an age, as I found in writing The Prize, in which oil is entwined with everything from geopolitics and the fate of nations to how we live our daily lives, and where we live them, to the quality of the world’s environment and concerns about the future climate.
Today, over 70 percent of the oil used in the United States is consumed in transportation – cars, trucks, airplanes, and trains. But for how much longer?
Probably for a good deal longer than many think. No question, there is a much-intensified drive to develop alternatives in transportation. Also, cars will become much more efficient. This great spirit of innovation is one of the major themes in the new edition of The Prize. Thus, in the decades to come, oil will face competition in transportation, its main market -- from electricity, advanced biofuels, perhaps natural gas, and certainly from greater efficiency.
Yet, all these alternatives and innovations will take time to have effect on something so big as the world’s automobile fleet. At the same time, oil consumption will go up globally as more and more people in booming economies like China and India and elsewhere enter the automotive age. Based upon the current stage of technology, oil demand will likely increase at least for a few more decades, beginning with a rebound when the Great Recession ends.
When, back in 1855, the promoters finally paid Professor Silliman the $526.08 for his report on rock oil, they got their money’s worth. “It appears to me,” Silliman wrote, “that there is much ground for encouragement in the belief that your Company have in their possession a raw material from which…they may manufacture very valuable products.” Four years later, Colonel Drake hit oil. When one looks, on this 150th anniversary, at the vast scale of today’s oil industry, and how oil undergirds modern civilization and the way people live, Professor Silliman’s assessment ranks both as very prophetic but also as a colossal understatement.
Daniel Yergin received the Pulitzer Prize for his book, The Prize: the Epic Quest for Oil, Money, and Power, published in an updated edition in 2009 and featured at Barnes and Noble.
1 comment
Permalink
